The US dollar pushed above the 47,000 to the Iranian rial (IRR) threshold by the end of trade on February 5, gaining more than 1.1% and sending the IRR to an all-time low on the unofficial market, the Tehran Gold and Jewellery Union said.
According to independent trading company Olympic Exchange, by the end of the trading day currency brokers were no longer selling or buying the dollar, in a repeat of previous weeks, as they attempted to cut their losses on the depreciating rial. Meanwhile, the Central Bank of Iran (CBI), showing the scope of the rout, listed the US dollar at IRR36,949 on the official exchange mechanism, a rate unchanged since February 1.
Iran’s torrid relations with the Trump administration, the threat that the deteriorating relationship with the US poses to the nuclear deal which protects Tehran from crippling economic sanctions and the social unrest sparked at the turn of the year by economic hardship may all be weighing on the rial.
The euro gained more than 1% on February 5 to be traded at IRR60,000, while the pound sterling was purchased by black market sellers at above IRR67,000, up less than a full percentage point.
Tehran gold traders, who often track the rate of the dollar, have also seen significant gains in their business. One Iranian Bahar Azadi sovereign gold coin sold for IRR14,850,000, moving it up 2.3% over the past seven days.
Iran currently holds more than $132bn in foreign cash reserves and $600mn in gold, local media reported on January 23. With ample reserves of foreign currency in the CBI’s vault, the implication is that people should have nothing to worry about regarding the rial’s stability. Indeed, data in the Central Intelligence Agency’s (CIA) December 2017 factbook edition can be said to back up that point. Iran has higher currency reserves than more than 156 other countries around the world including Norway, Australia and Turkey.
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